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tv   Street Signs  CNBC  August 25, 2009 2:00pm-3:00pm EDT

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and empty above where marilyn monroe is out in westwood, california. it was up for sale and sold for 4.6 million to a japanese bidder. the woman selling the crypt whose late husband occupies it as well said she needs the money to pay off her mortgage. for the wife, the bid fell through and the japanese bidder said i'm sorry, there is a problem with the paying thing. he didn't have the money. they are going back to the other 10 bidders to see if they can get it sold off. you would spend the rest of the eternity above marilyn monroe. >> there is a paying problem. >> you want to show the picture. >> when we saw bernanke next to president obama, it reminded him of twins. there we go. >> i don't think it looked right for them to have ties on.
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not in martha's vineyard. >> i think we spent way too much time on the tie thing with bernanke and obama. >> i second that. that's it for us on "power lunch." have a great afternoon. >> we will obsess about something tomorrow. "street signs" begins in 30 seconds. car dealers have until tonight as the deadline extend the deadline once again. they are worth about $2.8 billion so far. reports say toyota will cut capacity by 10% as early as the current fiscal year and california home sales rose 12% in july compared to a year earlier when prices declined 20%. that's the news now. i'm julia boorsten.
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we are live at the floor of the new york stock exchange on a tuesday. economic news and all of it is pretty much better than expected. stocks are higher up and housing the main headline of the day and all home builders are trading higher. welcome to "street signs." here's what we are focusing on at this hour. our take, have a glass of champagne and enjoy martha's vineyard and get back to the desk. tell us if we should celebrate a 15% decline in housing prices or not and out of the wreckage is opportunity. meet the youngest entrepreneur in america. he is very young. morgan stanley and goldman sachs setting aside 34 billion this year, $3 billion. a support from paris where the french president nicholas sarkozia is clamping down. will president obama copy the french?
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bernanke should go. the other side, he is the eastern economist and ron ensana is here. one thing he will not take is the middle line. a small opinion on something. he's our senior analyst as well with the post of "street signs." let's get a check in on the rally. what's the headline. >> the important thing is the headline, but the housing numbers getting much of the attention and many stocks now up 60% in one month. take a look at a couple. you can look at them and this stock is almost 100% in the last month. a lot of distortions in the housing market and foreclosures and government programs. the fact is incrementally the news is getting better. look at the other stokes related. this is also doubled. a lost these stocks anded in
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lap the last several weeks, woe don't have any kind of top line growth. >> bab dasani, thank you. let's get to the panel. president obama reappoints pernanky, but there were sensors and one is here. the big question is this. he said he wasn't going to make news on vacation and he is up in martha's vineyard. why today? >> think about the circumstance barack obama finds himself in right now. august has been difficult so far as it often is for a president. they give up the bully pulpit and bad things happen. he is taking it from the right on the cost and expense of the program and the idea that it's a big government plan from the
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left for potentially sacrificing the option. he is getting a lot of fire from the right over the long-term. the mid-session reviews numbers out and expanded over the 10-year horizon and by reappointing, he is able to get cover to say i'm giving a second term to george w. bush's choice four years ago. they have been creative which is by the way how barack obama wants the public to see him. >> let's listen to what the president had to say. here's jim's feel yourself. in your outfit that looks similar to an outfit i saw this morning. you are the trip the here. here's what the president had to say.
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we have out of the box thinking that helps put the breaks on the free fall. >> i know your outfit and it's very close and even to a win. that does not mean you endorse the decision and say you shouldn't do this. >> yes. i don't think it's a bat decision. we could have done better. as a chairman, i would have rated him a c. he endorsed a lot of the greenspan policies that got us into trouble and he was slow to recognize the problems as they unfolded. the forecasts have not been particularly good. and he pumped the system full of money. given the circumstances he was under would have done the same thing and i would have rated him a c and could have found a better choice. >> what would have been the better choice?
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>> i think that some of the names have been thrown out there, they would have been reasonable choices as well and that would have been a good choice as well. i don't think martin would have had a chance with the administration. >> what do you say, karl? first of all your reaction and what you think about what jim had to say. you didn't say the same old larry summers. >> i am not surprised he was reappointed or nominated. the timing was interesting and we thought this was something that wouldn't happen until later on in the year, but it's a strong endorsement while there was a lot of chit-chat that practices he wouldn't be rea pointed and eliminate variable from the equation. >> you have known him for a long time.
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>> about 25 years. >> we rarely disagree. we have gone on a parallel thought process. i would give him an a plus and i agree he was late to the party. >> the shot of jim there. >> of the economic officials we have, the we cannot do about is ben bernanke. the rest are fully expendable. bernanke has been as creative as you can get for the situation. he has done things that were only thought about theoretically in the last 20, 30, or 40 years and pulled them off successfully. he wha he did was astounding. i was critical what when they were late to the party. he's done what he's done and it has been fantastic. >> he has a glass of champagne and may invite his twin or not. now he has to get back to the desk and get to his bagest challenge. that of course is housing. if you look at schiller, the founder of case schiller, here's what he had to say.
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>> it's predicting now that in years, home prices will be 6% higher than now. that is not a huge recovery. >> there is a lot of problems out there. i think there is a real possibility that we are going to see bad news and going to be a reversal again. >> it's going to upset ron, but before he goes straight to diana, we have been covering this throughout the day. what do you think the headline is? >> the interesting part i think is that anything that is positive will be good news. we have seen toech r so much going down. it was not year over year and there three factors left out that could be juicing the numbers to the upside. number one is that first time home buyer tax credit that gives people $8,000 more in buying power. number two is foreclosure moratorium in place this year and the banks held off on foreclosures putting the obama
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plan into effect. number three, the data is not seasonally adjusted. it goes up in the spring and if you don't adjust, you are skewing them up and going month to month. i choose year over year and prices are down 15% on the case schiller. >> all right, ron. you heard diana. fair issues there and if anybody would spin the numbers positively would be schiller himself. >> not necessarily. it could be used as a hedging tool. we are seeing a recovery in housing and the anecdotes are that the sales are in places like california to pick up in the sales of condos in miami and the most previously overheated and most busted areas of the country are starting to come back. i think the bigger problem is about housing. it's making sure that they do not withdraw stimulus too soon and as the journal is, the 1937 scenario where all of a sudden they think everything is-o fire
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and they tighten up and get a recession. that happens with or without a recovery. >> your point on housing which i want to emphasize, there is a point where anecdotes might give you a better perception. wait until they show up. >> i have been traveling a lot. disneyland was packed a week ago friday and airports are busy. new york restaurants are full. there bidding wars for condominiums in miami. >> that's a big deal. 2 1/2 weeks ago, they were showing pictures of family stuck in the condo by itself. we are starting to see a pick up all over. >> do you think it's fair to say we are out of the woods on housing? >> that would be strong. >> i don't want to put words in your mouth, but clearly you are seeing a turn? >> yeah. >> ron was talking about anecdotal communication and put the report at 42% of all homes
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being performed now are first time home buyers. 30% are investors. 75% and they are adding the text credit. you have a real manipulation because of supply and demand from the tax credit to get them moving up. what happens when they come up? that's why i'm afraid that it's too early to tell. i want to see how the market survives when you take away the stimulus. >> should the -- 8,000 credit scheduled to expire at the end of november.
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the new homes market and the home resale market and just as we expanded the cash for clunker, expanding it becomes a question of stimulus. bernanke has to worry about stimulus. that's housing and where is the exit strategy going to be going forward? when is government going to get out and let it recover or is it going to go more into housing or through the tax credits? >> it's too early for the government it get out of anything. i agree with what diana was saying. not only extended, but expanded. some argue that it should be double the 15,000. a non-refundable tax credit can a big deal. the government shouldn't be
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getting out. it's way too soon. we have another year. >> that's artificially pushing prices higher. whatever it is it's on to the home prices artificially. >> all turns come from artificial government stimulus. almost all of them anyway when you are in a deep recession. that doesn't happen on its own. >> a close link and single digits performed with americans. we get through this and that's where the schiller point comes in. a lot of americans stage a come back and housing stages a real come back. >> you are getting it right. you need the stimulus in place whether it's home buying or other types of rebates.
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that's because the markets have that number that is correlated with an increase in consumer spending. is it potentially a sign of the real deal? >> that is correlated with the stokt market. when ron talked about stimulus, we pumped in a record amount. we have no example of the amount we have and the strategy will be crucial. when you give them an a plus. that's what my fear is. we can expand credits and get home prices up and create
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inflation and come crashing back down. that's the worry. >> i'm going to shoot myself now. they came out and said the fed balance sheet is if necessary could be expanded to $4 trillion if needed to prevent that second depression. i keep looking at the screen. i gained so much weight it looks like -- >> it's just the angle. >> i don't think the fed is going to make a mistake. if you go back to g william miller who is a terrible fed chairman or others before him who made policy mistakes, bernanke has not done that. he handled the first half fine. >> well, a plus from you and b from jim. >> i'm not trying to get an interview from him. >> there we go. neither has jim. >> i give them an a. >> thanks to all three of you.
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you heard jim said maybe even janet. what do you think larry summers is doing today? that's our e-mail question of the day. >> is harvard hiring? >> next on the show, $1 billion for bonuses and president sarkozy said enough is enough. will the next move force french bankers out of the country and perhaps the biggest, we copied the french? real estate 101 learned to out smart the housing market and one-of-a-kind business market. i'm racing cross country in this small sidecar, but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and wherever i go, i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick.
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>> sarkozy buckling down on bonuses or else. this report was filed in paris. >> a new way to calculate bonuses will put forward at the next g 20 meeting regarding the bonuses, one third will be paid straight away and the remaining will be on the results of the bank. the largest french banker will not wait to implement the new rules and decided to reduce the amount of bonuses that puts forth the first half of the year and 500 million euro instead of
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the plan of billion. i met with the fresh finance minster and she was satisfied with this agreement. >> we will try to convince our partners both in the united states and the uk and germany and other places around the world where opinions are equally sensitive that this is the way for the. >> france wants to go further and makes another proposal at the meeting and wants to cap bonuses on the salary. the french president made clear it has to be making the french bank highly uncompetitive in case that are are the only to implement such a rule. >> they're are cracking down on the amount and paying it out. bernanke and timothy guidener and the pay czar.
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what is he going to do. the financial market is at the center for american progress. you can make the case for why we should copy the french. >> i don't know that we should copy them, but president obama is clear. they want to change the way that compensation is structured in finance. the compensation practices favor the short-term and the build up of systemic risk and that's a problem. they try to manage risk in the reform and compensation is a part of that. not the key part, but people taking the short-term profits home and building up the risk in the process. >> what are the numbers here, this set aside and not guaranteed to be paid.
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we will clarify all that. $700,000 on average and 20 billion more than last year. morgan stanley up to $14 billion which would top what they paid last year. >> the two alone are $4 billion from the record compensation two years ago. is there a way to say it's fair? >> life is unfair. they take risky bets and make a lot of money. i don't think that legislating compensation achieves the end that most people want. they tried to cap ceo pay at $1 million in terms of deductibility. they started granting stock options and adults who have lawyers and accountants figure out ways to get regulations and tax code. that's what adult live is all about.
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the president and tim geithner is my age. we have been around long enough to see this happen. i would go and it's not the behavior they thought they were condoning. it's really working at odds with the customers as opposed to attacking the pay. it's the symptom and not the cause. >> he makes a good case. in terms of being the symptoms and not the cause. >> it's not it is biggest issue, but pay is important. president obama is talking about legislati legislating. they are working through the corporate governance and if we have seen anything, it's that he is not a french socialist. even his worst critics are comparing him to hitler. not sarkozy.
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he is pretty moid rate and he will continue. he is trying to better align compensation packages for banks with those of shareholders and i think in the case of significant institutions, aligning with the taxpayer. >> if you look at goldman, they are making money hand over fist every quarter. they paid the government back. >> except for that aig issue. >> it upsets a lot of people and they lost a lot of money and want to know what it was between paulson and on the credit default swaps. >> that's the 13 billion they got from the government. >> and the government owns 70% of aig. the biggest share holding outside of that. again, i would attack the more core problems on wall street where big firms may be traded
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against their customers or things like that. i would be more concerned about those things. that builds the profit pool that one might argue is an ill-gotten gain. >> final word. >> i would say that pay is important because it drives behavior. i think it's more of a difficult task than trying to incentivize and give incentives to people to take the right action in the first place. prot posals sarkozy is talking about and the same we were talking about such as longer vefing of options. longer recognition of pay for banks and things like that that make them a longer term gain. >> appreciate it and ron, thank you for sticking around. cnbc senior analyst and the market movers for and former host of "street signs." just ahead on the show, no matter when which way health care goes, it's going to the
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internet. consider the ceos like the orbits of health insurance. we will explain and talk about how you can go online and change your insurance. did you know with one can of soda containing eight teaspoons of sugar. not diet. the details on something that can put an end to your sweet tooth and a dent on sweet stocks. a teaspoon of sugar makes the medicine go down? >> jufts a spoon fl. >> who sort of spoon is to be determined. a spoon fl. >> who sort of spoon is to be determined. us a spoon fl. >> who sort of spoon is to be determined. t a spoon fl. >> who sort of spoon is to be determined. f. >> who sort of spoon is to be determined. u. >> who sort of spoon is to be determined. l. >> who sort of spoon is to be determined. [ engine revving ]
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[ engine powers down ] gentlemen, you booked your hotels on orbitz. well, the price went down, so you're all getting a check thanks. for the difference. except for you -- you didn't book with orbitz, so you're not getting a check. well, i think we've all learned a valuable lesson today. good day, gentlemen. thanks a lot. thank you. introducing hotel price assurance, where if another orbitz customer books the same hotel for less, we send you a check for the difference, automatically.
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>> welcome back to "street signs." fractionally higher about a halç a percent. the culprits bhiptd less than anticipated gapes. the strength is in the semis. san disk by 4.7%. intel at 1.6% higher. two stocks to talk about.
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corinthian colleges with the top line at 29%. a lot of folks would drool over in the best of times. 4.8% higher and the retailer is expanding and say they are taking advantage of the real estate opportunities that have been left behind by the crisis. back to you. new guidelines recommend women limit sugar intake to 100 calories. that's six teaspoons. for men it's nine that. is not a lot. one can of cola is too much for all the women watching. 130 calories that, is teaspoons of sugar. two more than you are allowed to have. that's one soda. who would it hurt? it would hurt these guys. coca-cola, pepsico and the other like hershey and cadbury. with sugar prices up 85% due to
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a monopolizationed sugar market, what is going on? it's the orbit of health care. a technology company and shares are up nearly 40% and utah announced this company would be a part of health care reform. if other state it is would follow suit, should this be important in solving the prisz? we try to look at new inside. good to have you with us. >> great to be here. one thing assuming this is right, it's a website where you go online and shop for insurers and there 180? who knew there were that many. >> we are a market place and operate in all 50 states. 10,000 unique products and they compare, learn, and objectively make a decision to meet the
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requirements for health insurance needs. >> 10,000 unique products and 10,000 possible plans. >> 10,000 possible plans across 50 states. that terrifies someone like me. i can check the box of how many dependents i have or preconditions. they give me taylored ones. >> precisely. they have a tremendous volume of success and data. we reduce it to something that is manageable and understandable for you. tell us who your doctor is online and we will show you the products that you support. if you need maternity care or have young children, we will show you that. we have good pharmaceutical and physician benefits. >> what are you doing in utah? >> they are interesting and pass legislation in the state legislature to put an exchange in place much like is being discussed with federal legislation that allows people to look at products. this is what we have been doing
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for 10 years and utah selected us to put the exchange in place and we launchedula last week. we are off to a great start and it's another venue for the citizens to access health insurance in an affordable way. >> one thing i want to make sure i understand from some of the articles you have seen about the company. you rely in terms of funding on advertising on the site. >> no advertising at all. it all comes from the health insurance carriers after someone performed a product. none of these -- no commission structure or anything that is priced into the products. this will surprise you, but health insurance is fixed state by state. no discounting. >> it's interesting because what i am seeing, one analyst is criticizing the model saying the company's failure of execution in paid search advertising. what i'm getting at is there is a reason you are not going to
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paid search along the lines of you don't want for example viagra ads or other lifestyle ads on your site. >> search is really important to us. about 25% of people who come to us come through pay search. google, yahoo and msn. he has a small search issue we had in the past and didn't convert as many people coming through there. our e health is unbiassed and we don't inflict advertising and want it to be a trusted environment or safe harbor where people can do business. >> that's why two quick questions on that. one is on the advertising front. would you support or would it not hurt you if there was a ban on a lot of this advertising? >> it's a really good question and wouldn't hurt us at all. there a number of things advertised with health insurance that are not good products for people.
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discount programs and limited benefits and public policy formation and we are involved in d.c. and have been very, very vocal about. >> my final question is, you have 10,000 different plans you are talking about and 180 insurance companies. how do you feel about going to single payer? >> i don't think we are sided towards the system. everything we see, read, and hear indicate that is the trends are towards something that will be more moderated than the government ideas we have seen. it will be a much more centric approach. i felt that the health insurance reform would pass and don't have the same level of confidence based on the growing deficit and the concerns we have seen over the last several weeks. the legislation will be focused on reforms and embracing a lot of private sector. more importantly, finding good economies. we use the internet to make this
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more efficient in the economics. >> thanks again for joining us. >> jim cramer's take is the bearded one. remember the know nothing day? they will tell us what's going on and what does a 21-year-old kid know about the housing market that robert schiller does not? he will tell us in a couple of moments. coming up exclusively on "street signs." we'll be right back.
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welcome back to "street signs." a change and enjoying myself in the market. 57 billion in one month and one-year bills. joined him by two-year notes and grand total $99 billion out the door. $39 billion on tap. what did it do to the market? they are down a bit. what would have thought it would be down with spectacular data on consumer confidence. pretty good data and the dollar index is climbing a bit here and still at low levels. of course when you see the
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dollar index climbing, it's a give away from the high levels and that seems to be the case today. erin, back to you. >> have fun on fast mone. now here he is from they know nothing to i believe rejoicing at today's news. >> it's great news and i have to tell you, this is a person who literally i was shaking that maybe obama wouldn't pick him after last night's bizarre choice for the federal reserve. the chairman of new york. >> what are do you think of that? >> i was thinking now we are going to politicize this thing. instead he went with the high end guy, the president bush guy. let's not forget that. more of obama and bernanke. >> why now? that is sort of the strange thing. they go on vacation. >> was it larry summers? as much as i respect him, i think he just turned out to be not a comer in this game.
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i don't think he was in the race. there is nobody else that can do it. obama cares tremendously about what the world thinks often times measure what we may think and the world loves bernanke. he is a much-loved figure. >> what are do you think larry summer diagnosis? >> i don't know. is he in martha's vineyard too? maybe he's a nantucket guy. >> maybe in protest he is at jackson hole. >> it wasn't his time. it is bernanke's time. >> you have a lot of names. by the way, i love it because you went from that moment, the infamous or famous moment. they know nothing. you changed your mind about someone. do you think it's fair for people to acknowledge. jim cramer changes his mind. >> bernanke decided to recognize that the issue was deflation and recognized we were in a great depression and stopped the debating society which i didn't like and put the pedal to the
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metal and did everything you asked for so when you guy does that, you can't then come up with new reason yes you don't like him. i see that a lot in the market. they will be bad and the interviews are good. interest rates go up and then they don't. the problem is health care. you can invent reasons, but when a guy does what you want, you better get behind him or you are a fraud. >> let's get to housing. there is all kinds of ways to look at housing. you turned more positive and you have a couple of creative ways. >> this is with trust. precisely because of this, we are at the stage where lumber and wood will be worth more. louisiana pacific triple and that's nearly the company. i have another wacky one. macy's, everything was good except for the bed department and the big, expensive stuff.
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i think macy's ka be propelled further. >> the other is cher win williams. paint. >> this has been strong, but you throw a coat of paint on it when you are buying and selling. >> when you are depressed, you throw a coat of paint on it. at least inside. >> paint uses a lot of natural gas. you can get a double whammy. this market is so hostage to oil. it didn't matter what the case schiller was. we are totally hostage with oil which is a nutty thing. >> your final creative point of the day, the biggest owner of homes in america are not the builders although they rallied. it's b of a, jpmorgan and sadly against their will, they are the biggest. >> they have the inventory and it's marked down to extremes in the case of jpmorgan.
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i think jamie diamond marked it down more and it will be worth that. >> i can't believe he's a media mogul. very funny. all the newspapers. >> he's good. i bumped into a producer friend of mine who he said is he that good? no one is ever as good as you read about, except for him. >> thank you, jim. >> thank you. >> tonight on "mad money" at 6:00 and 11:00 eastern. it takes the yin and the yang to find the perfect balance. we went around the world to find the best yin and yang. very excited about these. plus housing lessons from a student. everyone else has been bailing on the market, kid was getting in in a unique way. the first student-run real estate firm, next.
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friends to get the real estate license. we had landlords all over the yesterday area. we were kind of small at first, but this summer we grew to another office and i have 12 agents. y that are all in school and on two separate teams. we have a blue and an orange team and they compete against each other. >> how much money are you make something? this is cnbc. we have to ask. >> we have revenues over $100,000, but i'm looking for the future and see the group as a steppingstone for everyone. i want them to come in and get sales experience from real estate experience. it's not about the money, but the experience. the money will come later. >> what do you think about the market? the real estate market. >> i know a report came out that it's up 3%. i think it's stable.
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i think buyers are afraid to put equity into homes and buyers are looking for deals. sellers are afraid to sell homes for not enough money and i think it's affecting the amount of inventory being sold. >> any goal of what you will do? do you want to go into skpreels view this as how you started a business and will you move to something different? >> absolutely. we are opening up a real estate academy and a property management side of the business and will definitely grow. the great experience for college students and love to open up the brokerage. i see myself refining what i have here and taking it to other college towns. >> we wish you the best. best. >> thank you. >> i'm sure a lot of people interested in the entrepreneurship and creativity alex has. he's a student at bu. up next, the market's balancing act. we check back in to talk about the staying power about the yin and the yang.
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welcome back to "street signs." i'm brian shactman. what a day we will in the oil business. just take a look at the chart, sit down and i'll tell you the story. we had a pop after consumer
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confidence numbers came out. we tested 75, got a tie at 74.96 and just like me and calculus, we failed the test, went straight down from there. it was weak. let me give you a few reasons for the possibility. talk about the resistance at 75. a lot of people talking about the cbo projections of $7 trillion in deficits. china weakness overnight didn't happy. there's talk the inventory numbers leaked a little bit and old fashioned profit taking. tomorrow, erin, of course, on squawk on the street we get the eia numbers live with a trader and we'll have them for you. >> now, it's all about the yin and yang with the markets. . we found both today. first the yin. the world's biggest provider of ship fenders, we're not kidding, profits were up about 37%. the company said today in the first half of the year. this is a sign of improvement or
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not? who knew ship fenders actually existed? i'm sure a lot of viewers did but we thought it was a pretty fascinating story. the company also makes rescue sub marines for navies around the world. here's the yang, hong kong exports fell on weaker demand from europe and the u.s. overseas sales down 19% in july, only 5.5 in june and only expected to be down 12%. much weaker than expected there. that's the negative news. do our traders believe in the yin or yang? joining us again today bernie mccherry and do you scalo from the cbo. doug what, do you think is a better indicator, the surge in ship fender deems? >> i'm confused about the ship fender thing. i just basically figured out port and starboard. i don't know what to make of it. >> so what do you think?
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as far as the economy though, the better or worse camp, which wins for you? >> i think there's a lot of good news coming out. it's not great news. the case shiller index, consumer confidence. i think generally people are optimists instead of pessimists. these housing numbers year to year are getting a little bit better. i think people want to look for optimism in the market. as long as we don't have any devastating bad news. >> what do you say, bernie? ship fenders or hong kong exports? >> i'd like to get a look how they did selling ballers. putting aside questions about due alt and the nature of reality, i suspects in the fourth quarter they didn't sell too many ship fenders. all kinds of maintenance things they probably put aside and now we're seeing recovery as people feeling more confident. i'm worried about aggregate demand and the yang has me a
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little bit worried. we've seen some weakness in china and i think we're not going to see a lot of stepping up by the consumer anytime soon. i'd be surprised we see an improvement in that area anytime soon. >> thanks very much, bernie, doug. let us know what you think, the yin or yang. of course, any thoughts on the ship fenders welcome, as well. and your thoughts after this. some people buy a car based on the deal they get. others by the car of their dreams. during the lexus golden opportunity sales event, you can do both. special lease offers now available on the 2009 es 350.
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